Fraud in Food Delivery Market Poses Threat to Consumer Protection

Published on July 18, 2019

Modern consumers are busy. There’s simply no time available to prepare a full meal every day. Fortunately, it’s never been easier to take advantage of having dinner delivered straight to your doorstep.

Plenty of merchants in the food and beverage industry have their own branded apps, allowing consumers to not only order food but collect points and special discounts while doing it. Delivery apps like DoorDash, Uber Eats, and Grubhub, make ordering dinner to your door a breeze. It’s no surprise that food orders placed via mobile in the U.S. are projected to reach $38 billion annually by 2020.

However, it’s not all good news. Elevated spending and activity in remote food and beverage purchases is causing a substantial increase in fraud. In fact, the 2019 Fraud Attack Index report from Forter reveals a 60 percent year-over-year increase in fraud attacks in the food and beverage industry in 2017 and a 79 percent increase in 2018.

Also, increased activity by fraudsters creates issues for everyone. Restaurants, ordering apps, banks and consumers ultimately pay the price.

Fraud is a Complex, Multifaceted Problem

People tend to think of fraud as a rather vague and singular concept, but there are different tactics fraudsters employ to separate people from their money.

Account takeover, card testing and gift card fraud are all common tactics used by criminals in this vertical. It reflects how fraudsters have a substantial number of vulnerable points to target, including everything from customers’ accounts, login information and a merchant’s own internal systems.

Fraudsters are ultimately opportunistic; they like to go with the path of least resistance. This is partly fueled by a 300 percent increase in account takeover attacks in 2017 alone, according to a study conducted by Javelin. When consumers fail to act according to best practices, they leave themselves vulnerable to fraud. Using unsecure, easy-to-guess passwords, reusing the same passwords for multiple sites and giving out personal information all commonly lead to account takeover attacks.

At the same time, the Javelin report reveals the food and beverage industry seeing a 170 percent increase in losses due to policy abuse. Much of this is traceable to one threat source called friendly fraud. In these cases, an attack is typically carried out by a seemingly legitimate consumer, sometimes without the person realizing they’ve done anything wrong.

Regardless of the attack method or whether it’s carried out by intentional bad actors or customers who simply don’t understand a merchant or banking policy, the result is largely the same: businesses lose money. In turn,  these actions drives up prices for consumers and limit choices available in the market.

Consumers Act Against Fraud

Businesses in the food and beverage industry are taking steps to curtail fraudulent activity. Like other sellers established in card-not-present transactions, food and beverage merchants are embracing a multilayer approach to fraud. Tools like device fingerprinting, address verification and dynamic fraud scoring are all crucial pieces of the puzzle. Yet, the crux of the matter is consumer behavior.

Merchants can block fraud, but only consumers can really stop it. It’s why we need to invest more energy in educating consumers about best practices to protect themselves and protect the market at large. A few recommended best practices and tips include:

  • Protect Your Information: Never give out secure information to individuals online. It doesn’t matter if the person claims to represent a bank, the IRS or another organization. Legitimate parties will never approach you online and ask for personal information.


  • Use Safer Payment Methods: Be aware that credit cards offer much stronger fraud protections compared to debit cards, but mobile wallet apps like Apple Pay offer much stronger verification and data standards compared to a typical card transaction.


  • Regularly Check Your Statement: Even if we’re not reliant on balancing checkbooks to track our finances anymore, you should still remember to check your account regularly for suspicious or unfamiliar activity.


  • Use Complex Passwords: Never reuse passwords for multiple sites. Instead, come up with a unique passcode every time, using a combination of letters, numbers and special characters. Consider using a service like LastPass to store them securely.

Responsibility for preventing fraud in the fast-moving food and beverage industry can’t just fall to one party. Restaurants, delivery services and consumers have a part to play as well.

Monica Eaton-Cardone is a News Columnist at Grit Daily. An entrepreneur, speaker and author, Monica Eaton-Cardone is widely recognized as a thought leader in the fin-tech industry and a champion of women in technology. She established her entrepreneurial credentials upon selling her first business at the age of 19. When a subsequent eCommerce venture was plagued by revenue-leeching chargebacks and fraud, Eaton-Cardone developed a solution that combined human insight and agile technology. Today, her innovations are used by thousands of companies worldwide, cementing her reputation as one of the payment industry’s foremost experts in risk management, chargeback mitigation and fraud prevention. As CIO of Global Risk Technologies and COO of Chargebacks911, Eaton-Cardone leverages her global platform to educate merchants on best practices in fraud prevention and to spotlight the competitive and economic advantages women can bring to the technology workforce. Her nonprofit organization, Get Paid for Grades, invests in students to inspire a new generation of innovators.

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